Recourse For Homeowners Who Feel Their Home Insurance Claim Was Settled Unfairly

In the aftermath of damage to or loss of a home, a policy holder turns to his or her homeowners insurance to process the claim fairly. Sometimes, the policyholder may disagree with the insurance company’s decision not to pay a claim. At other times, the policyholder may feel that the settlement offer is insufficient. In either case, the policyholder is not without homeowner recourse, as there are several avenues to contest the insurance company’s decision.

If your property becomes damaged by a covered loss, you are entitled to insurance benefits under your homeowners insurance. If you believe the value of the insurance company’s monetary offer to replace or repair your property is not accurate, you have homeowner recourse by making a demand for an appraisal under the policy’s terms. You hire an appraiser at your expense to assess the extent and value of your damaged property. The insurance company retains its own appraiser. The two appraisers then select an impartial third appraiser called an umpire, with the umpire’s expense shared by both parties. The three appraisers determine an appraisal award for the actual cash value, replacement cost, or the cost to repair the property. The appraisal process, absent very few circumstances, does not afford any appeal rights, so each party must accept the appraisal award as final.

The consumer may also file a complaint with the department of insurance explaining how the homeowners insurance claim was unfairly evaluated. Each state has an insurance commission. You may file your complaint online or mail a copy of your written complaint to the commission. Keep in mind that insurance departments cannot provide legal advice or determine fault for a loss. What they can do is determine whether a violation of law was committed. Typically, they will ask the insurance company to provide a written response so they can evaluate both sides of the issue.

The consumer may retain an attorney as a matter of final recourse. If the insurance company wrongfully denied or did not accurately evaluate the claim, a lawsuit for breach of contract can be considered. A judge or jury would determine whether the insurance company failed to provide the appropriate benefits under the policy. Some states have additional causes of action, such as bad faith. If the judge or jury determines the insurance company’s conduct was egregious or reckless, additional damages, such as punitive damages, could be awarded.

If the homeowner feels a homeowners insurance claim was processed unfairly, there are avenues for recourse, such as the appraisal process, an insurance department complaint and court intervention. Depending on your situation, consider contacting an attorney for legal advice.